Einhorn's DME Buys PayPal, Sells Victoria's Secret and Peloton

Greenlight Capital, the hedge fund founded by David Einhorn, added a position in PayPal Holdings Inc. and exited holdings in Victoria's Secret & Co. and Peloton Interactive Inc. during the second quarter of 2026. The firm disclosed these portfolio adjustments in its quarterly 13F filing with the U.S. Securities and Exchange Commission. These moves reflect a strategic reallocation of capital within the firm's investment vehicle, DME Advisors. PayPal's stock traded at $61.66 as of 21:58 UTC today, representing a daily gain of 4.16%.

Context — why this matters now

David Einhorn is a prominent value investor known for his high-conviction, concentrated portfolio and his early public short position in Lehman Brothers before its collapse. His investment moves are closely scrutinized for signals on value opportunities and sectors facing headwinds. The decision to initiate a position in PayPal follows a prolonged period of underperformance for the fintech giant, which had seen its valuation decline from pandemic-era highs. The exits from Victoria's Secret and Peloton suggest a retreat from consumer discretionary names vulnerable to economic softening.

The current macro backdrop is defined by moderating inflation and a Federal Reserve that has signaled a tentative pause in its rate-hiking cycle. The benchmark 10-year Treasury yield has retreated from its recent highs, providing some relief to growth-oriented technology stocks. This environment allows investors to reassess beaten-down names with strong cash flows and potential for operational improvements. Einhorn's move into PayPal may be a bet on such a turnaround story, capitalizing on market pessimism.

The catalyst for these specific moves appears to be the culmination of divergent company-specific narratives. PayPal has embarked on a new operational efficiency plan aimed at boosting margins and earnings per share. Conversely, retailers like Victoria's Secret and fitness companies like Peloton continue to face challenges related to changing consumer preferences and post-pandemic demand normalization. The filing represents a snapshot of Einhorn's portfolio as of June 30, 2026, capturing these strategic shifts.

Data — what the numbers show

PayPal's stock price closed at $61.66, after trading within a daily range of $59.34 to $62.31. The 4.16% single-day appreciation significantly outpaced the broader technology sector, as tracked by the Technology Select Sector SPDR Fund (XLK), which was up approximately 1.5% on the same day. This price action suggests a positive market reception to the news of a high-profile investor taking a position. The stock's performance year-to-date remains a critical metric for evaluating the potential success of this new investment.

The valuation metrics for PayPal present a compelling case for value investors. The company's forward price-to-earnings ratio had contracted significantly prior to this move, trading at a discount to its historical average and to many peers in the payments processing space. Its market capitalization, which had fallen below $70 billion, represents a fraction of the value assigned to newer fintech competitors. This discount likely contributed to its appeal for a fund like Greenlight Capital, which seeks undervalued opportunities.

The exited positions tell a contrasting story. Victoria's Secret, a specialty retailer, has faced declining mall foot traffic and intense competition from online intimate apparel brands. Peloton, which saw meteoric growth during lockdowns, has struggled with subscriber retention and profitability in a post-pandemic world. Both stocks have dramatically underperformed the S&P 500 index over the past twelve months. Their removal from Greenlight's portfolio indicates a judgment that their fundamental challenges are too significant to overcome in the near term.

Metric	PayPal (PYPL)	S&P 500 Index (Approx.)
Daily Performance	+4.16%	+0.8%
52-Week Range	$55.00 - $85.00	N/A

Analysis — what it means for markets / sectors / tickers

Einhorn's endorsement could provide a tailwind for PayPal's stock, potentially attracting other institutional investors who track 13F filings for ideas. This type of "smart money" flow can create a short-term momentum effect. The positive impact may also spill over into the broader fintech sector, particularly for established players like Block Inc. or Adyen NV that are also trading below their historical valuations. These companies could be re-evaluated if PayPal's turnaround narrative gains traction.

Conversely, the explicit exit from Victoria's Secret and Peloton could signal deeper problems within the consumer discretionary sector. It may prompt other funds to review their exposure to similar companies, particularly those with high debt loads and questionable earnings visibility. This could create near-term selling pressure on stocks within the direct-to-consumer retail and home fitness categories. The moves underscore a strategic pivot away from pandemic winners and toward post-pandemic value stories.

A primary risk to this thesis is that Einhorn's value-oriented approach may be early or incorrect. PayPal faces intense competition from Apple Pay, Google Wallet, and a host of buy-now-pay-later services, which could continue to erode its market share. A successful turnaround is not guaranteed. The market's initial positive reaction could fade if subsequent quarterly earnings fail to demonstrate the promised operational improvements and margin expansion, leaving new investors exposed to further downside.

Positioning data from other brokers indicates that short interest in PayPal had been elevated prior to this news, representing a significant amount of skeptical capital. Einhorn's entry could trigger a short squeeze if the positive momentum continues, forcing bearish traders to buy back shares to cover their positions. This would add fuel to any upward price movement. Flow data shows institutional buying in the options market for PayPal calls, suggesting other traders are anticipating further gains.

Outlook — what to watch next

The next major catalyst for PayPal will be its Q3 2026 earnings release, expected in late October or early November. Investors will scrutinize the report for evidence of progress on its cost-cutting initiatives and key performance indicators like total payment volume and net new active accounts. Any guidance revision for the full year will be critical for maintaining the newfound positive sentiment. The stock must hold above its 50-day moving average, near $59.50, to confirm the breakout.

For the exited names, the next earnings reports for Victoria's Secret and Peloton will be closely watched to validate Einhorn's decision. Weak comparable sales figures for Victoria's Secret or further subscriber losses for Peloton would confirm the fundamental challenges he identified. Key levels to monitor for these stocks are their recent 52-week lows; a break below those could signal a new leg down in their valuations as investor confidence erodes.

Broader market conditions will also play a role. Any hawkish pivot from the Federal Reserve that pushes yields higher could pressure technology and growth stocks anew, potentially capping PayPal's rally. Conversely, a continued dovish stance would provide a supportive environment for Einhorn's value thesis to play out. The CME FedWatch Tool shows the market is currently pricing in a high probability of stable rates through the end of the year.